Developers should cast their nets for foreign buyers

Now that the recent measures introduced by the Government to curb property speculation are finally beginning to bite, property developers here should start taking a more pro-active role in attracting foreign buyers.

Sales of new residential developments appear to be slowing down, while response to government land sales are expected to be tepid. For instance, the highest price for a 220,000 sq ft site in Pasir Ris was a joint bid by Far East Holdings and Frasers Centrepoint with an offer at $335 psf that was 10 per cent below the expectations of some analysts. The 99-year leasehold site attracted a total of only four bids.

The lacklustre response was blamed on coming land supply (11 sites for about 5,000 units in the fourth quarter), recent government measures and lack of proximity to MRT stations.

According to DMG & Partners Research: “The tepid response is similar to the two sites tendered after the Government’s cooling measures in August, where the winning bids missed our estimates by 12 to 16 per cent.”

The only other bidders were small and mid-sized developers: Allgreen, Hoi Hup Realty and Tiong Aik Group.

But instead of sitting back and waiting for the next boom cycle, or groaning and griping, developers here should be looking elsewhere for buyers.

Like many Australian, Thai and other foreign developers who for years have been enticing Singaporeans to invest in property overseas, their counterparts here should be going to places like the Middle East, India and China to try and sell their developments here.

Many of our developers like CapitaLand, Keppel Land, Frasers Centrepoint and Guocoland have plenty of experience in developing both residential and commercial property overseas, especially in China. Now they have to use their marketing skills to lure overseas buyers here. Perhaps they should even think of setting up marketing offices in key cities of China, India and the Middle East.

Foreigners already make up a large portion of property buyers here. Foreign buying doubled from just over 1,500 units in 1996 to nearly 3,000 units last year. For instance, the Chinese, who comprised just 0.3 per cent of foreign buyers in 1996, now account for 18 per cent of the units sold to foreigners, while Indians who made up 2 per cent of foreigner buyers 14 years ago now make up 7 per cent.

Vietnam was not mentioned at all in 1996 but now 2 per cent of foreign buyers are from that country. Malaysians and Indonesians still form the biggest foreign component, with the former accounting for 14 per cent this year and the latter 27 per cent.

The Far East Group, for instance, has offices throughout the region and regularly hosts potential foreign buyers in its residential properties in Singapore at its various serviced apartments and hotels here.

Prime Minister Lee Hsien Loong has said that we need some 80,000 foreign talent this year to keep the economy chugging along at a healthy pace. Even though this has been revised from an earlier figure of 100,000, it still represents a huge number that has to be fed and housed here. Developers should play their part in enticing them here with attractive deals.

Many of these foreigners, especially those from Hong Kong, Shanghai, Beijing, Mumbai and Delhi, should find housing in Singapore affordable, considering the high prices they have to pay for similar apartments in those cities.

Now that those with properties overseas are not allowed to own Housing Board flats unless they sell these foreign properties within six months of their public housing purchase, private developers should find it a little easier to market their properties to foreign buyers.

The other attraction of Singapore is the current low interest rate regime. Developers should be able to work with our banks and finance companies to offer attractive financing packages for foreign buyers.

Source : Today – 15 Nov 2010

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